Budget 2016: CRC energy-efficiency scheme to be scrapped

18 March 2016 by Carl Brennand

The Carbon Reduction Commitment (CRC) will be scrapped by 2019 – nine years after it was launched – Chancellor George Osborne has announced in his annual Budget speech. The government will abolish the energy-efficiency scheme within the next three years and replace the lost revenue by increasing the Climate Change Levy (CCL) in order to “incentivise energy efficiency.”

The news was met with mixed reactions. Richard Warren, senior energy policy adviser for manufacturers’ organisation EEF described the CRC as “a vastly overcomplicated tax that has had a negligible effect on energy efficiency improvements in industry.” Meanwhile, David Cockshott, chief commercial officer for Inenco Group, pointed out that losing the £900 million of annual revenue created by the CRC would mean businesses not currently eligible for the scheme would face higher energy costs once it was scrapped.

The CRC is a mandatory government programme that requires participating bodies to measure, record and report their annual electricity and gas-related carbon emissions. These organisations must purchase allowances for every tonne of carbon emitted, with the aim being that those that reduce their emissions will pay less. The scheme applies to around 7,000 UK companies that consume more than 6,000 MWh (megawatt hours) of electricity per each year and, upon its launch in April 2010, was intended to cut non-traded carbon emissions by 17 million tonnes by 2027.

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